ASX ANNOUNCEMENTCLEAN GLOBAL ENERGY SIGNS UCG LICENSING...

ASX ANNOUNCEMENT
CLEAN GLOBAL ENERGY SIGNS UCG LICENSING AGREEMENT
WITH INDIAN ENERGY MULTINATIONAL ESSAR ?V POTENTIALLY
WORTH MORE THAN US$150M PER PROJECT
February 10, 2011: Clean Global Energy has entered into a binding Heads of
Agreement with Mumbai-based oil, gas and power multinational, Essar, to provide
its UCG technology and expertise under a Technology Licence Agreement (TLA).
Essar, a $20B Indian energy major, is one of India??s largest private sector
companies and is engaged inter-alia, in the business of oil and gas exploration and
production, refining of crude oil, manufacturing, processing, transmission,
distribution and marketing of petroleum products.
Key terms of the agreement are commercial in confidence, however under the
agreement, CGE will be required to deliver and operate a pilot and subsequent
commercial UCG plant. Under the TLA CGE will hand over operations of the plant
to Essar within 3 years of commissioning the commercial plant. The TLA is
triggered if Essar is granted a UCG block/s by Coal India Limited, its subdiaries or
any other body corporate or government authority. Whilst the final bidding
approvals are not yet complete both Essar and CGE are confident of obtaining
approved UCG blocks. CGE is currently assisting Essar to complete the bidding
approval process during which time CGE will generate fee based income under the
HoA.
Mr John Harkins, Clean Global Energy??s Chairman, said ??We believe the
partnership with Essar has the potential to generate major revenue for our
company through licencing fees that represent the significant value of our UCG
technology, service fees to build and operate the UCG Syngas plant, and royalty
income from delivered Syngas product to be sold by Essar. We expect to be
generating the first license and service fees in the next six months.??
Essar will free carry CGE for 20% equity through to a commercial UCG Syngas
plant,at which time CGE will pay for that equity at cost (~US$30m) which should
have a valuation of at least US$100m based on NPV modelling.
Anticipated revenue streams for each potential project are as follows:
?h Licencing and project management fees during design , construction and
commissioning (US$50m to US$60m); and
?h Production royalties of US$15m to US$20m after achieving commercial
production.
Clean Global Energy Limited
Level 8, Bligh Chambers | 25 Bligh Street | SYDNEY NSW 2000
Phone: +61 2 9230 0318 | Fax: +61 2 9230 0319
www.cleanglobalenergy.com.au
[email protected]
??Licence fees are per project and we expect to enter into more technology licence
agreements under similar terms and conditions,?? Mr Harkins said.
??CGE is excited by the partnership with Essar and continues to pursue cleaner
coal commercial projects worldwide, that may inject significant revenue into our
company and deliver solid shareholder value.??
??Together with our Oklahama project with US energy giant, AES Corporation,
announced in December 2010, this agreement with Essar is yet more proof that
major international energy companies understand we are at the leading edge of
global commercial UCG technology and projects,?? Mr. Harkins said.